Legal Advice

The Importance of Business Contracts


If you own a business you will have to sign a lot of contracts. There are many different types of business contracts and commercial lawyers are needed to ensure you are not signing something that will adversely affect your business or your ability to run it.  People agree to contracts in all their daily buying without even realising it. Such contracts are not signed, but include a clause that by doing business with the company you agree to the terms of the contract.

This can be as simple as setting up a bank account or buying a book online. It is in place when you purchase groceries or go to the doctor or dentist.  Most people don’t even read these contracts and it doesn’t really matter most of the time. It simply protects the business in some way.

However, for many businesses certain types of contracts must be drawn up by a lawyer and carefully examined before being signed by both parties. For instance, a supplier will usually have a contract with the business to supply a certain number of supplies per month at a specific price. Such supplies must be in good condition and of good quality.  That’s a simple contract; most are much more complex.

No one should ever sign a contract if there is something in it they don’t understand. That is why commercial lawyers are essential. They can read it and know straight away if there is anything in it that might be detrimental to your business.

Many contracts are verbal, but the olden days of a gentleman’s handshake being as good as his word are gone. If something goes wrong, you could never prove what was agreed verbally whether you shook hands or not. The next thing you may know is the other company is suing you for breach of contract.  It is far better to spend enough time to get the contract written down and signed so that it will keep you out of trouble.  Then you and the other person will know exactly what is expected and how much it will cost.

So business contracts are an important part of doing business, but they must be carefully worded to ensure everything is exactly how you want it and the other party agrees to, before you both sign on the dotted line. That way you can’t get into trouble and business can be done quickly and efficiently as per the contract with everyone knowing exactly what is expected.

The fine details in verbal agreements can easily be forgotten over time and then there will be disagreement and discord with no one knowing what they have to do.

It is important to read all the fine print in every business contract and make sure you understand it before you sign on the dotted line.